European Markets Extended Weekly Losses After a Batch of Weak Earnings

Bridgette Randall
25 Jul, 2024
London

European markets extended this week's losses after a mix of weak earnings and global tech stocks rout. 

Benchmark indexes in London, Paris, and Frankfurt dropped between 1% and 2%, after U.S. market indexes dropped the most in nearly two years following disappointing earnings from Tesla and Google-parent Alphabet. 

Moreover, Nestle, BT Group, Centamin, Gucci-parent Kering, STMicroelectronics, Centrica, Air France-KLM, and Carrefour reported weaker-than-expected quarterly results. 

Market sentiment was downbeat on the worry that demand from China for European luxury goods is not likely to improve in the near future amid persistent economic challenges and a protracted property market slump. 

Closer to home, the Ifo Institute's business climate index dropped to 87.0 in July from 88.6 in June amid growing pessimism about the economic outlook in Germany, the largest economy in the eurozone. 

 

Europe Indexes and Yields

The DAX index decreased by 1.2% to 18,162.03; the CAC-40 index declined by 2% to 7,365.63; and the FTSE 100 index fell by 0.6% to 8,100.89.

The yield on 10-year German bonds edged lower to 2.39%, French bonds inched lower to 3.10%, the UK gilts inched lower to 4.11%, and Italian bonds decreased to 3.77%.

The euro edged lower to $1.08; the British pound inched higher to $1.294; and the U.S. dollar weakened to 87.81 Swiss cents.

Brent crude decreased $1.40 to $80.30 a barrel, and the Dutch TTF natural gas fell by €0.81 to €31.89 per MWh.

 

Europe Stock Movers

Nestle SA decreased 4.9% to CHF 88.96 after the Swiss food products and beverage company lowered its full-year outlook following the 3% decline in sales in the first half. 

STMicroelectronics SA declined 14.7% to €31.62 after the advanced chipmaker reported lowering its outlook for the second time this year. 

Centamin declined 6.1% to 121.50 pence after the gold mining company reported weaker-than-expected net income in the first half. 

Centrica PLC dropped 7.2% to 132.0 pence after the company said Scott Wheway has resigned from the Chairman of the Board office and would not seek re-election as a director. 

British American Tobacco rose 4.4% to 2,690.0 pence after the company's first-half results met investors' expectations. 

BT Group declined 1.5% to 137.45 pence after the British telecom company said revenue in the fiscal first quarter declined. 

Unilever plc increased 6.4% to 4,678.0 pence after the food products maker reported better-than-expected first-half results. 

Kering SA dropped 6.4% to €279.25 after the Gucci parent issued another profit warning citing weakness in China sales.

Kering stock dropped to a seven-year low, near the level last seen in August 2017, after the luxury goods company said first-half operating income plunged 42% to €1.6 billion.

The company also issued a dire warning for the second half and added that operating earnings are likely to fall 30% from a year ago. 

Gucci sales are struggling in China because of high youth unemployment and a lingering property market crisis. The luxury label accounts for about half of Kering sales and two-thirds of its profits. 

Air France-KLM increased 3.3% to €8.17 despite the Franco-Dutch airline reporting second quarter earnings below market expectations.